Category: Money Tips Date: 2007-06-18
Chartered Financial Analyst to draw your attention: insights into how to avoid the mistakes made for a successful investment plan is usually the most important elements.
If individual investors recurring investment in the common errors, then the biggest enemy is himself. In fact, despite a seemingly trivial error, sometimes on the overall return on investment produced amazing effects. CFA Institute, as the management of global respected Chartered Financial Analyst program and assessment of the non-profit professional organization, recently invited a special selection of members designed to help individual investors to identify the most common, but also a very high price for some mistakes. These include:
1. Not set investment strategy. From the outset, every investor should be to develop an investment strategy as a framework to guide future decision-making. Well-planned strategy should take into account include the time frame, risk tolerance, amount of investable assets, as well as future plans to invest several months, including the number of important factors. Chartered Financial Analyst (CFA) Zhen Ning? Wyatt, said: "From the beginning, individual investors should know how much they want to achieve profit and how many are willing to bear the loss."
2. Invest in individual stocks rather than diversified equity portfolio. Invest in individual stocks than the investment has been diversified stock mutual funds or index-based investment fund to greater risk. Investors should maintain a wide variety of investment portfolio in order to cover different types of assets and investment. Not diversified investments, will invest in an individual in the face of a particular stock or industry fluctuations appear extremely weak. Chartered Financial Analyst and Certified Public Accountant (CFA, CPA) Brian?布里登巴赫to remind investors: Do not be diversified mutual fund portfolio diversification and confused. You may have more than one fund, but, after careful study, you will find that investment is still concentrated in similar industries, and even some of the same securities.
However, Wyatt also reminded investors that hold too much over-diversification and investment products, especially when investors hold sort of a small portfolio, it will also generate excessively high in comparison with the asset size Comprehensive cost. Moreover, the best way is by seeking professional or a trusted investment adviser to obtain proposals, both to seek a delicate balance.
3. Investing in stocks rather than investing in the company on. Investment is not gambling, not a luck thing. Investment is the commitment to a certain degree of risk is acceptable to their own long-term growth potential that companies provide financial assistance. Need to analyze the company and industry fundamentals, rather than the rapidly changing stock prices. CFA Bob? Bilkey said: "The pure performance of the market or to a company's product or service to buy some sort of personal preference shares is bound to be a money-losing ways." Surveys the corporate governance, to make sure that its ability to ensure basic corporate governance, will help you to avoid future trouble.
4. Expensive to buy. The basic principle is that low-cost investment to buy, sell high. Why do so many investors do exactly the opposite? CFA bass? Hamilton? King pointed out that the major reason is "chasing performance." CFA Casey? Takeweier have also shared the same opinion: "Too many people invest in those in last year's impressive performance in the past few years, or a particular type or some assets, that these assets performed well the last time Therefore, its performance in the future will be very good. This view is absolutely wrong. investors buy low and sell high-typical situation is that they have a long-term investment strategy, but failed to persist in the end. face the market's short-term phenomenon They abandoned the original strategy, with strategic and tactical investment in alternative investments. "
Other "high-priced buy" for investors, often a number of fashionable people in the investment to buy those "hot" stock. These investments are usually sought after in a short time, causing many people to cycle or trend in the stock when you buy the vertices. Takeweier emphasis should always be strictly focused on the investment outlook, not just past performance.
5. Sell it. "High-buy low and sell the other side can only be an expensive loss of pay." CFA Rajiv? Wayans said, "Too many investors in a loss to make up for not willing to sell their shares, arrogant, unwilling to admit them expensive mistake to buy the stock. "wise investors know that this almost never happen, so to sell the stock to stop further losses. Keep in mind that not every investment will add value. Even professional investors, in a particular year will be to achieve more than the performance of the Standard & Poor's 500 Index was powerless. Invest in any one stock to be set up stop-loss line. The best way is to accept the loss and the assets re-enter the more promising investments.
6. Frequently buy and sell. Too frequent trading, more than any other factors that reduce the return on investment. University of California, two professors at a large discount brokerage firm from 1991 to 1996, the 64,615 individual investors, the stock portfolio conducted a survey and found that without considering the conditions of transaction costs, these investors, the annual rate of return of 17.7% per year higher than the stock market rate of return of 0.6%. However, if the transaction costs included, the investor an annual return rate will be reduced to 15.3%, the annual stock market returns than the low rate of 1.8%. Can be seen, it is important to take a long-term buy and hold strategy, rather than over-active transaction.
